Position (adopted March 2003):

PIA National supports altering the current depreciation schedule for intangible assets to reflect the useful life of intangible assets in today’s business world.  The current 15-year schedule is onerous for small business owners.

Background:

Central to independent agents is their ownership right, control and value of their intangibles assets (known in insurance as renewals/book of business and records, and in general business terms as “a customer list”).  PIA National was formed with the responsibility to advocate for PIA member agencies’ interests and rights to include this fundamental business asset. 

Accordingly, PIA National has long spoken to and acted before states and Congress, as well as litigated on a number of key tax policies/proposals, bills, regulations and/or treatments where directly related and/or unique to PIA member agency owners’ interests. 

With specific respect to intangible assets, PIA undertook an aggressive advocacy campaign on the tax treatment of intangibles beginning in October 1987 with IRS’ proposed change in the House Omnibus Tax Bill to eliminate that tax treatment.  This campaign included many success, including:

• Successful litigation (joining as Interveners to the Garnett/Newark Morning Star Ledger Co. v. US. 113 S.Ct. 1670);
• Needed federal tax law changes (1993 Omnibus Budget Reconciliation Act);
• Forming the IRS implementation rules (IRC Section 197);
• Monitoring agency treatment by IRS agents under these new rules;
• Testifying before Congress about continuing problems encountered;
• Helping agencies and their CPAs better understand the contemporary issues for them in terms of organizing and valuing acquisitions and mergers relative to this schedule;

PIA continues to press for further refinements needed in this area as member needs change.

2003 PIA Position Paper: Amortization of Intangible Assets